By Eric Nicolson

THE HIGHEST court in the UK has thrown out an appeal by Perth and Kinross Council to preserve their pioneering second-hand car licensing scheme.

Drawn up in 1988 by the then Perth and Kinross District Council in conjunction with other bodies, it was designed to protect car-buyers from cowboy traders and has since been adopted elsewhere.

It imposed conditions, including vehicle inspections, display of pre-sales information sheets and availability of written reports to the buying public to help them determine a vehicle’s road-worthiness.

The House of Lords, however, has deemed the local authority acted outwith its powers and now the council is reviewing the conditions it attaches to second-hand motor dealers’ licences.

The case came to the Lords after Methven dealer Douglas Stewart started a long legal process that included the Court of Session in Edinburgh. He claimed the scheme went too far and argued the council’s licensing committee was operating above and beyond its powers.

In 1994 Perth and Kinross District Council refused to renew his licence, stating, “He consistently failed over a long period of time to observe the conditions of the licence in respect of pre-sales information sheets and pre-sales inspection reports despite having these matters drawn to his attention on several attentions”.

The case was heard before Lady Hale and Lords Steyn, Rodger, Carswell and Hope, who all found against the council.

Lord Hope of Craighead said, “I would hold that Parliament did not intend the licensing system to be used in this way. The practice of Parliament is to provide for the protection of consumers by means of primary legislation that can be applied uniformly across the country. It is not its practice to delegate powers to legislate in this area to individual local authorities.”

Reacting to the ruling, a council spokesperson said, “Perth and Kinross Council is disappointed by the decision of the House of Lords to dismiss its appeal against a finding by the Court of Session that local authorities do not have the power to attach a condition to licences issued to second-hand motor dealers.

“This condition required second- hand car dealers to prepare an inspection report with information on the condition of the car and to make it available to purchasers.

“The issue arose from a petition for judicial review raised by a local second-hand motor dealer whose licence was not renewed by the council as a result of his failure to comply with the condition.

“The council’s scheme for the licensing of second-hand car dealers, incorporating this condition has been recommended for adoption as a model scheme by Cosla and has been adopted by many other local authorities. The Scottish Motor Trade Association include the use of inspection reports in their current Code of Practice.

“The House of Lords recognised the support the condition had among the public and the fact the scheme was introduced only after consultation with the chamber of commerce and trade bodies. However, in what was a narrow point, the Lords found that the Civic Government (Scotland) Act 1982 does not provide a specific power to interfere in the freedom of a licencee to contract with the public.”

Lord Carswell pointed out that Scottish local authorities are not precluded from including conditions in their licensing schemes aimed at protecting consumers interests, but those conditions should not interfere with the licencee’s freedom to contract. He said the licencing powers are still to be interpreted as broad in scope and the council is “encouraged that this endorses the pro-active approach it takes to protecting the public.”

In light of the House of Lords’ opinions, Perth and Kinross Council is reviewing the conditions it attaches to second hand motor dealer’s licences.

The spokesperson added, “The public can be confident this review will aim to maximise the protection the council is able to afford in law. In addition, the council will work together with other local authorities to lobby for the legislative changes required to allow the high level of protection for the public that it wishes to provide.”

The council is not in a position yet to comment on the costs incurred in relation to the case.